Investing.com - Oil prices hit a three-week high on Friday, extending recent gains as escalating tensions between the U.S. and Iran forced market participants to price in higher geopolitical risk premiums.
New York-traded West Texas Intermediate crude futures rose 45 cents, or 0.8%, to $57.52 a barrel by 7:56 AM ET (11:56 GMT), while Brent crude futures, the benchmark for oil prices outside the U.S. gained 84 cents, or 1.3%, to $65.29.
WTI oil was on track for a weekly gains of nearly 10%, while Brent was up 5.3% from a week ago.
U.S. President Donald Trump had authorized military strikes against Iran in response to the strike against a U.S. surveillance drone late Thursday, but called off the attack at the last minute, according to a New York Times report.
The incident underlined the risk of disruptions to global oil supplies coming out of the Persian Gulf, where six oil tankers have been damaged by explosions in the past six weeks.
“We continue to believe amid this growing tension in the Middle East, along with expectations of an OPEC+ deal extension, that oil prices will trend higher over the second half of the year,” ING commodities strategists Warren Patterson and Wenyu Yao said in a note. “A weaker U.S. dollar, with a more dovish Fed only adds further support,” they added.
OPEC members have postponed their scheduled review of the existing agreement on output restraint by a week to July 1. Non-members, most importantly Russia, will join the following day. Most analysts expect the aggregate output cut of 1.2 million barrels a day to be extended through the end of the year, although Saudi Arabian Energy Minister Khalid al-Falih has indicated that quotas for individual countries may need to be recalculated.
In other energy trading, gasoline futures surged 3.4% at $1.8465 a gallon by 7:58 AM ET (11:58 GMT), while heating oil jumped 1.9% at $1.9197 a gallon.
Lastly, natural gas futures traded up 1.1% at $2.208 per million British thermal unit.